Business Interruption Week – Part 3 – Land Mines

Here are some of the business interruption issues to discuss with your insurance agent:

Does your loss of business income coverage include a penalty for under insurance? Ask your agent. If the answer is yes, find out how to get rid of it. You may have to fill out a worksheet that helps to determine the amount of coverage you should buy. Many agents (and many insurance buyers) hate these forms. However, filling them out is the best way to tell if you have the right amount of insurance. Tell your agent you want the agreed amount endorsement.

Running out of Time
Does your policy limit the time that you can receive lost income payments? Most policies limit coverage to 12 months. Is that long enough? If your building were destroyed by a fire you may have all kinds of contractors ready to help. However, if a windstorm hits, you may have to wait for some of your neighbors. Running out of coverage after a loss is as bad as having no coverage. Don’t forget that your local zoning boards and inspectors are ready, willing, and able to slow things down for you too.

Running out of Coverage
This is related to the worksheets I mentioned in the coinsurance item above. Talk with your agent about how you can be assured that you will not run out of coverage after a loss. Trust me. Few businesses really have enough coverage here. Fill out those worksheets!